DETROIT -- Ford said Tuesday that it will invest $1.6 billion to build a new plant in San Luis Potosi, Mexico, making it the latest automaker to expand its presence in Mexico.
Ford said construction of the new plant will begin this summer. It expects to begin producing cars there in 2018. Ford's investment in Mexico will create more than 2,800 jobs by 2020, delivering a blow to the United Auto Workers union, which pushed for higher wages in its contract talks with the automaker last year. Ford's announcement prompted a swift reaction from the union.
"Today's announcement ... is a disappointment and very troubling," UAW President Dennis Williams said in a statement. "For every investment in Mexico it means jobs that could have and should have been available right here in the USA."
Ford's investment also comes during a presidential election where the leading Republican candidate, Donald Trump, has publicly pressured Ford to drop its plans to expand in Mexico.
Ford said Tuesday that it remains committed to investing in the U.S. and adding jobs in America even as it expands in Mexico.
"We have to make decisions on a global scale because we compete globally," Joe Hinrichs, Ford's vice president and president of the Americas, told the Detroit Free Press. "But let's be clear: We are a proud American company and the majority of our investment happens here in the U.S."
Hinrichs said Ford has hired 25,000 workers in the U.S. in the past five years and produces more cars in America than any other automaker.
Trump said last month that he would stop Ford from building in Mexico if he is elected president and would threaten the company and any other automaker considering such a move with a 35 percent tariff on any products or parts imported into the U.S.
"Within 24 to 48 hours I will get a call from the head of Ford and he will say, 'Mr. President, we have decided we're going to build our new plant in the United States.' ... That's 100 percent sure," Trump said in March when he spoke in the Detroit area. "They're going to say, 'We're moving back. You want us to move to Michigan?' And I'll say, 'Yeah.'"
Since then Ford Chief Executive Officer Mark Fields has repeatedly said the automaker remains committed to investing in the U.S. but will not alter its plans also to expand in Mexico.
Tuesday, Hinrichs said the investment in Mexico will not result in a loss of jobs in the U.S.
In fact, Hinrichs said Ford made a commitment in November to spend $9 billion on U.S. plants and create or retain more than 8,500 jobs as part of a new four-year contract with the UAW. Of that, $4.8 billion goes to 11 facilities in Michigan.
Despite that commitment, Ford made clear last summer that it planned to move production of its Ford Focus and C-Max hybrids cars from a plant in the Detroit area to another country by 2018. Ford has said it will replace those cars with other products but has not said what those vehicles will be. Analysts have said the plant most likely will get the midsize Ford Ranger pickup and a new Ford Bronco SUV.
Hinrichs declined to say Tuesday what products Ford plans to make at its new plant in Mexico but did say the company intends to make the Focus in a "lower cost" country.
"When we look at our manufacturing footprint, especially with small cars, we have not made it a secret that we want to improve the profitability of small cars," Hinrichs said.
Last fall, the UAW pushed Ford as well as General Motors and Fiat Chrysler Automobiles largely to eliminate a two-tier wage scale. Under the new contact entry-level workers hired after 2007 who are making between $15.78 and $19.28 per hour will see their wages raised immediately to $17 to $22.50 and then up to about $29 per hour over an eight-year period.
The automaker also said last year that it plans to spend $2.5 billion on new engine and transmission plants in Chihuahua and Guanajuato, in central Mexico, creating 3,800 jobs.
But Ford hardly is alone. In recent years automakers that include General Motors, Honda, Hyundai, Nissan, Mazda and Volkswagen have all announced plans to either expand existing plants or build new plants in Mexico. Fiat Chrysler Automobiles also has said it is considering an expansion of its production there.
Business on 04/06/2016